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In this episode, we welcome Jeff Williams, COO of Shore, and Max Martineau, Chief of Staff, who discuss the Partnership Development Team (PDT) and its role in identifying successful partners across our portfolio. The conversation offers a look at the process of investment and acquisition, underscoring the PDT’s impact on driving growth in the microcap space.

Transcript

 

Introduction

Anderson Williams: Welcome to Bigger. Stronger. Faster., the podcast exploring how Shore Capital Partners brings billion-dollar resources to the microcap space. In this episode, I talk with Jeff Williams and Max Martineau about the Partnership Development Team, or PDT, at Shore Capital Partners.

Jeff and Max, thanks for being here. Max, will you start us off and just introduce yourself and say what you do and where you do it?

Max Martineau: Yeah, absolutely. Excited to be here, Anderson. My name is Max Martineau and I'm the Chief of Staff here at Shore Capital. I joined Shore actually back in 2017, directly out of school, and spent my first four and a half years on the investing side of the house and have been in my current role for about two and a half years.

What about you, Jeff?

Jeff Williams: I serve as the Chief Operating Officer, and I work with Max a lot.

The Partnership Development Team

Anderson Williams: Max, will you give us a sense as we get into this conversation about the Partnership Development Team, about Shore's approach to investment and our sort of philosophy in the microcap space, just so the listeners can understand how this conversation fits into that broader picture.

Max Martineau: Yeah, I'd be happy to kind of dive in and parlay that into how the Partnership Development Team fits into that broader conversation. There's a slide that we use a lot at Shore Capital. A lot of things have changed here in the last 14 or 15 years, but one constant has been our investment philosophy and the big buckets there are industry, management, company.

That's really how we think about investing. And those first couple fall purely on the plate of the investment team. Picking an industry niche, understanding the headwinds and the tailwinds and everything that comes along with it. The next part of that in the management side is identifying executives and board members.

And where the Partnership Development Team really comes into play is once they've filled those first few buckets and understand, we like this industry, we found the right people to partner with from an executive standpoint, the Partnership Development Team really comes into play to help them find the right business to partner with.

Anderson Williams: And what do they do, Jeff? Give us a sense of what the Partnership Development Team is doing as they step into that role.

Jeff Williams: I think they do two things. One is they help the investment team. They partner with the investment team to search, locate, introduce with a warm introduction, potential businesses to partner with. The second thing they do is once they found that initial business to partner with, they look for what I would say, add on acquisitions, add on relationships and investments to further fuel the growth of the platform.

Anderson Williams: And give us a sense, and maybe Max, this comes back to you in that investment philosophy. Shore grows our companies early through acquisition. Can you just describe a little bit more about how our investment process gets put into action? Once you've stepped through industry management company and then how are we growing and as a result, why is having a support like the PDT so critical to Shore companies?

Max Martineau: Yeah, absolutely. I think a lot of the businesses that we invest in, going back to that Shore Capital playbook, a lot of these businesses are highly acquisitive. So that's a reason the Partnership Development Team can make an outsize impact early on. There’s situations where the Partnership Development Team finds the initial platform, and there's also situations where they work on add on searches after the fact.

Sometimes they do both those things in concert. Just recently, Sam Thornton, one of the members of the PDT actually sourced a recent business services deal, Action, Termite and Pest Control. So, Sam was introduced to the founder of that business through his organic outreach strategy several months ago.

 

Once he made that initial connection and found out that there could be a potential to move forward, he introduced Brent from that team to Mickey Jiang from our business services fund, that deal ultimately went through and closed a couple of weeks ago here. And what's most exciting about that deal is one, Sam helped get a platform deal across the finish line for us.

But two, as soon as the LOI was signed for the platform business, meaning that initial investment that we make, Sam was actually already ready to start that add on search process. So, by the time that partnership was formed, Sam had already filled the top of the funnel with potential deals for Brent and the Action Team and Mickey to potentially partner with.

And to me, that's a really powerful fact pattern.

What’s the Difference?

Anderson Williams: And so, in that sense, it's not just that you're cold calling and finding one off kinds of potential partners. You're actually, these folks are getting to know the business. They understand the investment thesis. They understand the growth thesis. There's a lot of alignment there.

It's not just sort of outsourced sales or something like that.

Max Martineau: Yeah, I think it's funny you say that. I think in some of the early days of the Partnership Development Team, some of the folks lovingly called it a calling team, and we were quick to correct them that it's a pretty sophisticated tech enabled group of inside salespeople.

And one of the questions I get a lot, we actually use different groups, both within Shore Capital and at our portfolio companies, whether it's a senior investment team member here at Shore or one of the business development professionals at one of our platform businesses. They are able to work with any sourcing group that they want.

So, we've got our internal Partnership Development Team that we're talking about today, but there's other groups that are out there in the market. And one of the questions that I get is, hey, Max great, you've got this service. It seems like they've had a lot of success in the early innings here, but what differentiates your team versus some other groups in the market?

And for me, what it ultimately comes down to, right? We've made a tremendous investment in the technology behind this team, the training of this team. But none of that in a vacuum is going to make us successful to me. It's the ability of this team to execute. And a big piece of that is their understanding of the Shore Capital way.

They sit in our Monday morning meetings. They sit in the deal team strategy sessions, right? They know how we think, and ultimately, they know how to sell the resources that we have here at Shore Capital. And that's really powerful.

Anderson Williams: It is really powerful because they know the full ins and outs of the entire context, the stage of the business, the stage of the investment, the stage of the thesis, the partner's desires, the CEO's.

And it's powerful to hear you describe that more fully, right?

Max Martineau: Absolutely.

Change Over Time

Anderson Williams: And how over time, and Jeff, maybe you can answer this, but how over time does the PDT's role change with a platform? To what extent is this happening in the early stages for that initial investment or in those early acquisitions versus in maybe the growing or harvesting phases, does it change over time in terms of their role in their partnership?

Jeff Williams: Yeah, I think the role of the Sourcing Team, the Partnership Development Team changes over time, you know, in the beginning when we are in the thesis generation phase and sourcing executives and board members, you're probably out there looking for our initial investment in the space and there's a lot of searching and kind of feeling our way as we go, depending on what the market landscape looks like, so I think there's some discovery to it. By the time that they're in six, nine, 12, 18 months on a project, the discovery phase is largely behind them. And they're very precise and they're very deliberate in what they do day in and day out with the investment team. And by that time, probably with the executive management team to help find wonderful businesses to introduce to the folks at the company and also Shore.

Max Martineau: And Anderson, one thing I'd add to that, too, what I feel is pretty unique and strategic about the way that the PDT operates is that looking specifically at the add on work with our portfolio companies, they can plug into lots of different phases and meet the company where they're at, right? So, I just referenced the Action, Termite and Pest deal with Sam Thornton where he sources the platform, immediately starts to build out a pipeline of add on acquisitions.

Then there's other situations. Recently, Ellie Hanson, another member of our team, worked with one of our Food and Beverage platform companies who is in the harvesting stage or certainly moving towards the harvesting stage. So, whereas Sam made an impact on, in the earlier innings, kind of in the planting growing phase, Ellie actually was able to help source a partnership that was transformational and will make a material impact as that team starts to think about a sale process in the next year or two.

Anderson Williams: It's interesting as you talk about that and describe it on that end of the story, Max, and I would love to hear more, in the early stages, your alignment with the partnership and deal team and the investment thesis and all of that is rooted in Shore. In that last example, it's actually rooted into a company that's on its own, Shore's behind it, but this company is growing, it's succeeding, it's doing well.

How does the team connect with that later stage company to ensure, not just alignment with EBITDA or with the market or the region, but with culture, with other things. How does that relationship pick back up to make sure you're finding the right business for a partnership at the right time?

Max Martineau: I think like anything else, not to be terribly cliche, but communication is key because that relationship and the needs of that portfolio company change pretty dramatically over time, right?

What is needed at Action, Termite, and Pest Control in the early innings is very different than what may be needed at a Food and Beverage company, like I mentioned, who's heading towards sale. And I think it's critical for the Partnership Development Team to work with the senior investment team, as well as the business development leaders at these companies to ensure alignment.

And one of the things that I'm able to do here is let the Partnership Development Team or Partnership Development Managers work directly with this team and figure out what's the right cadence for update calls. What's the right cadence for ensuring we're on the same page in terms of types of acquisitions, size, geographic region, service offerings, et cetera.

So, I think it's critical to let the teams build out a good working relationship, both with the senior investment professionals at Shore, but to your point with the business development leaders at the portfolio company, if we are misaligned in the type of searches we're running. We're not providing value for our portfolio companies.

Biz Dev Leaders’ Best Friend

Anderson Williams: And so just a clarifying question, is this then a process that's always running behind the scenes for all of our portfolio companies, or is this a transactional kind of, we're looking for a target here, we're looking for a platform, or we're looking for an add on in this space, or if I'm running one of our companies as someone from this team, always kind of searching.

Max Martineau: Yeah. So, I'll maybe take even one step back from that and talk about the two different ways really that folks, and I'll call it the Shore Capital ecosystem interact with the Partnership Development Team. So, the first bucket, which we talked about a little bit is those platform searches, right? So, Senior member of the deal team is looking at a new thesis, right?

Going back to industry, management, company, and they engage with the Partnership Development Team to help build out a list of potential targets. From there, the Partnership Development Team continues and helps build out that research to understand, hey, what does this universe look like, right?

Just because somebody does a roadmap and picks a thesis. They may not fully understand the landscape in the same way that they do after they speak with the Partnership Development Team. In terms of the specific targets out there, right? They know the trends and they know where things are going, but they may not know what that target list looks like. So, the Partnership Development Team provides a lot of leverage on a research front when it comes to finding these specific targets.

Ultimately, those groups will then get back together, meaning the PDM and the senior deal team professional to get an understanding of here's what the list looks like. Is this company a fit? Is it not? It may be, hey, we've already spoken to that company six months ago. Take them off the list. Too big, too small, wrong service offerings, et cetera.

And once the PDMs get that initial sign off on the prospect list, so they can go out and start searching for these companies using our best-in-class tech stack. And that really allows them to empower the deal team, right? To work on their top of license and continue to fill the funnel. The process to engage from portfolio company perspective is relatively similar.

I'd say key difference being that they're engaged with senior leaders of the business development team, rather than the senior member of the Shore team. Of course, the Shore team is always there to act as a liaison, but they will engage directly with the Shore team. And I think all companies can engage with the Partnership Development Team at all different phases like we talked about.

To your point, it's not necessarily something that's always running in the background. They would reach out to Jeff and myself and say, hey, we think it might make sense to run a search. We've run a search with this other company. It didn't work out or, hey, we haven't run any searches yet, but really want to put the pedal down on M&A.

So, once they come to us, we staff it internally with a member from the Partnership Development Team. Generally speaking, each member of the team has about five projects going on at once. So that's comprised of both the platforms. As well as these add on acquisition searches. And from there, really the same process that I described for a platform unfolds with an add on acquisition, only difference being they're working directly with the management team versus internally with the folks here at Shore.

Anderson Williams: That makes a ton of sense. And I appreciate that clarification. Jeff, we talk a lot at Shore about helping companies grow bigger, stronger, and faster, and particularly with less risk. What Max just described to me sounds like a biz dev leaders’ best friend. A way of, we put a lot of pressure on our companies to grow and to acquire and that's part of our thesis.

This seems like a huge investment and a de risking tool for those biz dev leaders who have the pressure of early acquisitions and speed and speed and speed in the early stages of a platform in particular.

 

Jeff Williams: Yeah, that's right. We talked earlier about time. Oftentimes time is not your friend in PE back businesses.

So, the thesis typically surrounds around growth and the Sourcing Team, the Partnership Development Team, they're there to do just that to help make warm introductions, help do everything they can to help the businesses grow and do it with less risk. If the team at Shore, the inside sales team at Shore is working with a business development team at a portfolio company, they act as an extension of that team.

They will oftentimes interface with their CRM, get on their weekly biz dev calls, talk about strategy, talk about one degree of separation type networking things, what they're seeing out there. Work on the story, work on the pitch, if you will, refine that. So, I think when we are working on behalf of a portfolio company versus Shore, it plugs in as just a whole nother offensive tool to help that BD person be more successful and the CEO and the platform to be more successful.

So, it's typically welcomed with a lot of excitement when they get to plug in with the team that Max leads.

Max Martineau: And the one thing I would add to that, Anderson, in terms of some of the questions we get from portfolio companies and some of the things that I've seen work really well, right? We talked about, there was comments early on about a calling team and I think very much everybody at Shore and the portfolio companies has come around to understand the level of sophistication and professionalism with this team.

And taking that a step further, I would think of Alex McGee and our team working on an add on engagement with Courser. And some of the feedback I've gotten on Alex goes way beyond he's able to find targets, source them, get in touch with the owners and tell the Shore story. He's really become a thought partner, both for the senior investment team here at Shore and the business development leader at that company.

And to me, that's sort of the next level impact that that team can make. Yes, we can find businesses. Yes, we can utilize our tech stack to track results, but being a thought partner for the folks who are oftentimes pretty lonely in some of those senior executive roles at our portfolio companies is something that I think I'm really proud of. And this team has done an amazing job of.

Jeff Williams: Yeah, and we talked earlier about when you select to join a portfolio company as a CEO or CFO or head of BD, you know, check those boxes. There's a lot of sponsors out there. Do some diligence in the sponsor. Do you get along with the senior investment team? You liked the thesis.

I think this is a whole nother avenue of what resources does the sponsor provide to help make sure that you're successful and increase your chances of doing it bigger, stronger, faster, with less risk. This is exactly that. This team is there to help just fuel that growth. And it's been a fantastic success.

Max Martineau: And what I would say to one of the things, and I think this podcast does a great job of unpacking some of the resources that we have at Shore Capital, but something that can be pretty intimidating as a new executive in the Shore Capital family is there's so many resources. It can be tough to understand, when do I tap in? Is this a sign of weakness that I'm tapping in? And I think they quickly learn that it's actually quite the opposite. We want you to use these resources and we may have questions. If you don't, right? You've got a team of seven full time team members with a best-in-class tech stack thinking, eating, sleeping, breathing, steel sourcing.

If you don't use them, we think it's a massive, missed opportunity.

Exceeding Expectations

Anderson Williams: So Max, I know the team was formed in 2021, and I'm just curious how this has played out as compared to your expectations.

Max Martineau: Yeah, absolutely. I think things have gone really well and frankly, outkicked a lot of the expectations that Jeff and Justin and other leaders of the firm had at the time when we first started thinking about potentially bringing a resource like this in house. I think like we do with a lot of things in this business, we go ask our peers who we respect, what have they done? What have they seen? What has worked well? What has not? And I think the resounding feedback was this is a smart play for a business that invest in the part of the market that you guys do just understand that it's going to take some time to roll out.

I think where we've been impressed to the positive is the impact that the seven members of this team have made in a relatively short period of time. So, since initial launch in 2021, this team has closed 18 separate deals, inclusive of six platform investments. So that way out strikes any of the industry peers that we spoke with.

We knew we were going to have to invest some time to build the technology, the infrastructure, and the team. I think we've been blown away by the early success that we've seen and are really impressed by the numbers and the impact it's had at Shore.

Jeff Williams: If you're the right entrepreneurial spirited type founder, you're partnering with a great team and you get to take it to the next level. Things you probably already dreamed about. And Shore with the Sourcing Team can help you realize those dreams. It's fantastic.

Anderson Williams: If you enjoyed this episode, check out our other Bigger. Stronger. Faster. episodes at www.shorecp.univeristy/podcasts. There you will also find episodes from our Microcap Moments as well as Everyday Heroes series, each highlighting the people and stories that make the microcap space unique.

This podcast was produced by Shore Capital Partners, with story and narration by Anderson Williams. Recording and editing by Andrew Malone. Editing by Reel Audiobooks. Sound design, mixing, and mastering by Mark Galup of Reel Audiobooks.

Special thanks to Jeff Williams and Max Martineau.

This podcast is the property of Shore Capital Partners, LLC. None of the content herein is investment advice, an offer of investment advisory services, nor a recommendation or offer relating to any security. See the Terms of Use page on the Shore Capital website for other important information.

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